Distressed Loans Hit Five Year Lows; Delinquencies Down for all but FHA Loans


loans fell to the lowest level in five years during the second
quarter the Mortgage Bankers Association (MBA) said today. Both
delinquencies and loans in foreclosure saw substantial decreases both
from the previous quarter and from one year earlier with foreclosure
starts during the quarter at less than half of the peak rate of1.42
percent in September 2009.

delinquency rate for one-to-four family mortgages decreased to a
seasonally adjusted rate of 6.96 percent at the end of the second
quarter, 29 basis points (bps) below the rate at the end of Quarter
One and the lowest rate since mid-2008. The rate at the end of the
second quarter of 2012 was 7.58 percent.

National Delinquency Study bases its delinquency rate on loans that
are at least one payment past due but not in foreclosure. Loans for
which foreclosure proceedings were started during the quarter
represented .64 percent of mortgaged properties and those starts were
down from .70 percent in the first quarter. Loans actively in the
foreclosure process represented 3.33 percent of all loans compared to
3.55 percent in the first quarter and 4.27 percent during the same
period in 2012.

rate of serious delinquencies, those that are 90 or more days past
due or in foreclosure was 5.88 percent, down 51 bps from the previous
quarter and 143 bps year-over-year. MBA said that both first and
second quarter results may overstate the improvement in longer term
delinquencies because a number of distressed loans have been
transferred to a large specialty servicer which does not participate
in the MBA survey.

and loans in foreclosure now represent 10.13 percent of all
mortgage loans, 17 bps less than in the first quarter and 149 bps
below the rate in Q2 2012 and the lowest rate since 2008.

Brinkmann, MBA’s Chief Economist and Senior Vice President of
Research and Economics said, “For most of the country,
delinquencies and foreclosures have returned to more normal
historical levels
. Most states are at or only slightly above
longer-term averages, and some of the worst-hit states are showing
improvement. For example while 10 percent of the mortgages in Florida
are somewhere in the process of foreclosure, this is down
considerably from the high of 14.5 percent two years ago. While
Florida leads the country in the rate of foreclosures started, that
rate of 1.1 percent is the lowest since mid-2007 and half of what it
was three years ago.”

said some of the highest numbers are in New York, which hit an all
time high in the second quarter
and is now essentially equal with
Florida, and New Jersey and Connecticut. The percentage of loans in
foreclosure in New Jersey remains about the same as the rates in
California, Arizona and Nevada combined. The foreclosure percentages
in Connecticut are back to near all-time highs for that state.

contrast,” he said, “foreclosure starts fell or were unchanged in
43 states and the foreclosure inventory rate either improved or was
unchanged in 45 states.

with a judicial foreclosure system continue to bear a
disproportionate share of the foreclosure backlog. While the
percentage of loans in foreclosure dropped in both states with
judicial systems and states with nonjudicial systems, the average
rate for judicial states was 5.59 percent, triple the average rate of
1.86 percent for nonjudicial states. Both declined to recent lows,
with judicial states seeing the lowest foreclosure inventory since
2009 and nonjudicial states seeing the lowest foreclosure inventory
since 2007.” Brinkmann said.

delinquency rates decreased from the first quarter on a seasonally
adjusted basis for all loan types except FHA loans. Prime fixed-rate
mortgages (FRM) decreased 23 bps to 3.54 percent and adjustable rate
mortgages (ARM) by 87 bps to 6.75 percent. In the subprime category
FRM were down 131 bps to 18.81 percent and 271 bps to 21.01 percent
for ARM. The VA rate was 6.14 percent, a decrease of 20 bps but the
FHA rate rose six bps to 11.03 percent. The FHA increase was led by
a 26 bps increase in the 30-day delinquency rate.

foreclosure inventory rate for prime FRM was down 27 basis points and
down 56 bps for ARM. The inventory for subprime FRM increased 39 bps
but the ARM inventory decreased by one bps. FHA loans were down 28
bps points and VA loans 10 bps.

the challenges in interpreting the true seasonal effects in these
data when comparing quarter to quarter changes, MBA said it is
important to highlight the year over year changes of the
non-seasonally adjusted results. Compared with one year earlier, the
foreclosure inventory rate decreased 71 bps for prime fixed loans,
292 bps for prime ARM loans, 102 for subprime fixed, and 486 for
subprime ARM loans, 55 bps for FHA loans and 40 for VA loans.

the past year, the non-seasonally adjusted foreclosure starts rate
decreased 21 bps for prime fixed loans, 72 bps for prime ARM loans,
34 for subprime fixed, 30 for subprime ARM loans, 72 for FHA loans
and one bp for VA loans.

Leave a Reply